myi: So how’s life in the world of FSA compliance?
It’s very busy at present, as there are a number of regulatory areas that are on the verge of significant change. Therefore, we are readying our customers so that they will be fully prepared.
In terms of compliance the headline change will be the move from the FSA to the Financial Conduct Authority. We’re already seeing subtle movements in policy therefore, it’s down to us to read, review and update our customers on what they will need to implement.
The other major area which is on a lot of firms minds is the shift towards the RDR, which seems to be drawing ever nearer.
With such a big transition on the regulatory horizon it means that a lot of firms and individuals within the industry are having to adapt their business models or career direction.
myi: What areas of regulation are keeping you the busiest?
Based on the effects of what has happened within the financial services industry over the last few years, we are seeing an increasing number of firms changing their structures.
We are currently project managing several FSA Applications for firms who have decided to leave their Network as they feel that direct regulation is better suited for their business going forward.
We are also being kept busy holding our customers hands with the transition of the RDR ensuring that all of their processes and procedures are RDR friendly.
To be honest, all aspects of regulation are keeping us very active as so many areas are changing on an ongoing basis e.g. the recent changes to the complaints handling rules. I really do sympathise with firms as compliance is more than just a full time job for us let alone trying to advise and keep on top of the rules at the same time.
myi: So is being directly regulated the way forward for firms in the current climate?
It’s really down to individual choice and whilst I’m an advocate of direct regulation I can’t say that there isn’t room for Networks as they do have a significant role to play in the market.
A large number of our customers have previously been with a Network in their early days of trading so that they had complete support but based on cost and their increased industry experience have moved towards direct authorisation.
There are a number of benefits with being directly authorised and our customers never look back when changing their model. A key benefit is that firms are in complete control of their finances i.e. they don’t have to pay a set percentage of turnover to a third party.
The other benefits include only having to adhere to the FSA’s rules and not Network rules that are often imposed to tighten compliance and can sometimes be quite restrictive.
I believe there are far too many scaremongers out there who cause unnecessary worry for firms who are thinking about going directly regulated.
At the end of the day as long as a firm keeps up to date with regulations, follows the advice process correctly, has concise systems in place that can evidence that they are treating customers fairly and report back to the FSA on time via the GABRIEL system then they will be on the right track.
The majority of our customer base engages us so that we can ensure they are staying onside with regulation and we ensure that they have the necessary evidence in place to meet the FSA’s TCF outcomes.
myi: Have many of your customers received a visit from the FSA and what tends to be the result?
Yes, a large number of our customers have received a visit of sorts ranging from a thematic review covering the TCF initiative or more focussed visits looking at the firms systems and controls, training and competence arrangements, advice process etc.
All of the visits have ended positively as we ensure that our customers have the necessary regulatory evidence in place to satisfy the FSA requirements.
We are very lucky to have the customer base that we do as all the firms that we service are very proactive with compliance and are a sheer pleasure to deal with. A good indicator is when firms approach us for our assistance as they are taking the lead in wanting a support function in place.
Once onboard we just have to ensure that their interpretation of the rules is correct and that it is consistent throughout the business.
As part of our service we ensure that we visit our customers before, sometimes during and if required after an FSA visit so that it runs as seamlessly as possible.
myi: So is compliance all down to individual interpretation of the rules then?
Great question…
It can be. A simple take on this could be TCF e.g. if we were to ask a Broker if they treat their customers fairly we’d likely get a punch!
A bit extreme I know but what I mean is that all the firms that we have ever supported only have the best interests of their customers at heart, it is their ultimate aim to provide great customer service and treat their customers fairly as without doing so could really harm their reputation in their local area and certainly evaporate any word of mouth referrals.
Firms also now have to appreciate the impact of social media as bad news travels even faster than it did before.
Interpretation though can be a wide surface area as you might perceive something slightly differently to someone else. What we do is study all of the FSA’s sourcebooks in great depth then create easy to read compliance manuals so that firms can implement the correct procedures.
Yes it then makes it our interpretation and the firms understanding of our guidance but we test this by conducting thorough compliance vi
